Short answer: a lender may not discount or leave out your income because it is a pension, an annuity or another retirement benefit, and it may not turn you down because of your age. It may look at how much income you have and how long it is likely to continue, and in a judgmental review it may relate your age to facts such as the length of the loan. Separately, a Treasury rule protects up to two months of certain federal benefits paid by direct deposit when your bank receives a garnishment order. This is general information, not legal or financial advice.
Your retirement income counts
Regulation B says a creditor “shall not discount or exclude from consideration the income of an applicant or the spouse of an applicant because of a prohibited basis or because the income is derived from part-time employment or is an annuity, pension, or other retirement benefit”, and that it “may consider the amount and probable continuance of any income” (12 CFR 1002.6(b)(5), eCFR, text up to date as of October 28, 2026, read October 30, 2026).
The official interpretation adds that a lender must judge retirement income “on an individual basis, not on the basis of aggregate statistics”, by looking at your actual circumstances (comment 6(b)(5)-1, Supplement I). A lender need not consider income at all, but if it looks at each part of your income, it “may not automatically discount or exclude from consideration any protected income”; any discount must rest on your own facts (comment 6(b)(5)-3). For the documents lenders ask for, see how lenders verify income.
What the rule says about age
A creditor “shall not take into account an applicant’s age (provided that the applicant has the capacity to enter into a binding contract)”, except as the rule allows (12 CFR 1002.6(b)(2)(i)). In the rule, “Elderly means age 62 or older” (12 CFR 1002.2(o), eCFR). The exceptions:
| Kind of review | What Regulation B allows |
|---|---|
| Credit scoring system that is empirically derived and statistically sound | Age may be a predictive variable, but the age of an elderly applicant may not be given a negative factor or value (1002.6(b)(2)(ii)). Applicants 62 or older must be treated at least as favorably as applicants under 62 (comment 6(b)(2)-2). |
| Judgmental system (a person weighs the application) | Age may be considered only to judge a pertinent element of creditworthiness (1002.6(b)(2)(iii)). The comment says a creditor “may not reject an application or terminate an account because the applicant is 60 years old” (comment 6(b)(2)-3). |
| Any system | Age may be used to favor an applicant who is 62 or older (1002.6(b)(2)(iv)). |
The comment gives examples of age used with other facts, decided case by case: a lender “may consider the applicant’s occupation and length of time to retirement to ascertain whether the applicant’s income (including retirement income) will support the extension of credit to its maturity”, and may consider whether the security is enough when the loan term exceeds your life expectancy (comment 6(b)(2)-3.i and ii). It may also use age to read your job or address history, since a retiree may have recently moved (comment 6(b)(2)-3.iii). For your wider rights, see your rights against loan discrimination; if you are turned down, see the adverse action notice.
Social Security and other public benefits
Regulation B treats income from a public assistance program, which the official interpretation says includes social security and supplemental security income (comment 2(z)-3), under the same rule as age (1002.6(b)(2)). How that works, and how a loan counts for SSI, is in personal loan on Social Security income. If you owe Social Security an overpayment, see Social Security overpayment repayment options.
Garnishment and federal benefits in your bank account
When a bank receives a garnishment order against you, it must review your account, generally within two business days (31 CFR 212.5(a), eCFR, read October 30, 2026). The rule covers benefit payments from the benefit agencies it lists, which are the Social Security Administration, the Department of Veterans Affairs, the Office of Personnel Management and the Railroad Retirement Board, paid by direct deposit (31 CFR 212.3, eCFR). The protected amount is the lesser of the benefit payments posted in the two-month lookback period or the balance at the time of the review (212.3). The bank must give you “full and customary access” to it and may not freeze it in response to the order (31 CFR 212.6(a), eCFR). For money above that amount, the bank follows its usual procedures (212.6(d)).
Example, only for the math (example figures): a federal benefit of $1,800.00 is directly deposited each month, so two deposits in the lookback period come to $1,800.00 x 2 = $3,600.00. With a balance of $5,000.00, the protected amount is $3,600.00. With a balance of $2,500.00, it is $2,500.00.
What this rule does not cover: payments from a private pension, an annuity or a retirement account are not benefit payments from a listed benefit agency, so this rule does not protect them. Other law may, so ask a lawyer or a legal aid office about your own case. See also wage garnishment for an unpaid loan.
What a payment takes from fixed income, only for the math
This example is only for the math. The $3,000.00 loan and the $2,400.00 monthly income are example figures. The rate is the Federal Reserve’s August 2026 average of 11.90% APR for 24-month personal loans at commercial banks (Federal Reserve G.19, released October 7, 2026, read October 30, 2026); your own rate depends on your credit and the lender.
| Item | Example amount |
|---|---|
| Loan amount | $3,000.00 |
| Monthly payment, 24 months at 11.90% | $141.08 |
| Total of payments | $3,385.92 |
| Interest | $385.92 |
| Share of $2,400.00 monthly income | 5.9% |
$141.08 x 24 = $3,385.92, and $3,385.92 - $3,000.00 = $385.92. $141.08 is 5.9% of $2,400.00. To see how a lender weighs payments against income, see debt-to-income ratio for a personal loan.
Other ways to borrow to compare
- A loan from a workplace retirement plan, if your plan allows it: see 401(k) loan vs personal loan.
- Borrowing against your home: see reverse mortgage vs personal loan.
Questions to ask a lender
- Which of my income sources did you count, and did you discount any of them? Why?
- What documents do you need to show my pension or annuity will continue?
- Did my age play any part in the decision or the terms?
- Would a shorter term or a smaller amount change the answer?
Checklist
- List every income source with its monthly amount and proof.
- Remember a lender may weigh how long income will continue, but may not discount retirement income just because it is retirement income.
- Check that the payment fits your fixed income before you sign.
- Keep federal benefits on direct deposit if you want the garnishment rule to apply to them.
- If you think age or income type was held against you, ask in writing and keep copies.
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Sources
- eCFR: 12 CFR 1002.6, Rules concerning evaluation of applications (Regulation B), current text up to date as of October 28, 2026
- eCFR: 12 CFR 1002.2, Definitions (Regulation B), current text up to date as of October 28, 2026
- eCFR: Supplement I to Part 1002, Official Interpretations (Regulation B), current text up to date as of October 28, 2026
- eCFR: 31 CFR 212.5, Account review (Garnishment of accounts containing federal benefit payments), current text up to date as of October 28, 2026
- 31 CFR 212.3: definitions (benefit agency, benefit payment, lookback period, protected amount)
- 31 CFR 212.6: rules and procedures to protect benefits
- Federal Reserve: G.19 Consumer Credit (released October 7, 2026), terms of credit, August 2026: credit card plans and 24-month personal loans
Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.